Correlation Between Lotte Energy and PJ Metal
Can any of the company-specific risk be diversified away by investing in both Lotte Energy and PJ Metal at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lotte Energy and PJ Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotte Energy Materials and PJ Metal Co, you can compare the effects of market volatilities on Lotte Energy and PJ Metal and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lotte Energy with a short position of PJ Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Energy and PJ Metal.
Diversification Opportunities for Lotte Energy and PJ Metal
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and 128660 is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Energy Materials and PJ Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJ Metal and Lotte Energy is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lotte Energy Materials are associated (or correlated) with PJ Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJ Metal has no effect on the direction of Lotte Energy i.e., Lotte Energy and PJ Metal go up and down completely randomly.
Pair Corralation between Lotte Energy and PJ Metal
Assuming the 90 days trading horizon Lotte Energy Materials is expected to under-perform the PJ Metal. In addition to that, Lotte Energy is 7.56 times more volatile than PJ Metal Co. It trades about -0.03 of its total potential returns per unit of risk. PJ Metal Co is currently generating about -0.04 per unit of volatility. If you would invest 301,500 in PJ Metal Co on October 30, 2024 and sell it today you would lose (1,000.00) from holding PJ Metal Co or give up 0.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Energy Materials vs. PJ Metal Co
Performance |
| Timeline |
| Lotte Energy Materials |
| PJ Metal |
Lotte Energy and PJ Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Energy and PJ Metal
The main advantage of trading using opposite Lotte Energy and PJ Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Energy position performs unexpectedly, PJ Metal can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in PJ Metal will offset losses from the drop in PJ Metal's long position.| Lotte Energy vs. Samsung Electronics Co | Lotte Energy vs. Samsung Electronics Co | Lotte Energy vs. SK Hynix | Lotte Energy vs. HMM Co |
| PJ Metal vs. Nable Communications | PJ Metal vs. Cloud Air CoLtd | PJ Metal vs. Daishin Information Communications | PJ Metal vs. Korea Air Svc |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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